Appeals Court Calls Off 'Desperate Housewives' Retrial (Exclusive)

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UPDATED: In a big setback for Nicollette Sheridan, a court rules the actress' key claim over her firing from ABC's "Housewives" likely should have been resolved in favor of Touchstone. Sheridan's lawyer insists the Sept. retrial will go forward.

In a major setback for Nicollette Sheridan in her lawsuit against Desperate Housewives producer Touchstone Television, an appeals court has issued a ruling delaying indefinitely a planned September retrial and suggesting that the key claim in the case likely should have been resolved in favor of Touchstone, The Hollywood Reporter has learned.

As you'll recall, a Los Angeles jury deadlocked in March over whether the former Housewives actress was owed about $4 million for being improperly fired as retaliation for complaining after she was struck in the face by series creator Marc Cherry. (Cherry, originally a defendant, was dismissed from the case during trial.) The jury failed to reach a verdict, with eight of 12 jurors siding with Sheridan, so a retrial was set by Judge Elizabeth Allen White for Sept. 10.

Touchstone/ABC lawyers then appealed in an attempt to prevent a retrial, arguing that California law precludes wrongful termination lawsuits when an actress' contract option is simply not exercised. That argument was made unsuccessfully several times during the litigation.

But now, in a surprising development, on Friday the California Court of Appeals issued an order agreeing with Touchstone and bumping the planned retrial off the calendar indefinitely. In a short "writ of mandate," the appeals court overturned the trial judge's denial of Touchstone's motion for a directed verdict—essentially, that means the appeals court believes Touchstone should have won the major part of the case because a prior ruling in a case called Daly v. Exxon made clear that most employees whose options are not picked up can't sue for wrongful termination.

The ruling is a big blow to Sheridan. The appeals court set an August 9 hearing date for the trial judge to show up and justify why the case should move forward to a retrial, but Superior Court judges rarely attempt to challenge appeals court rulings. The likely effect, therefore, will be that Judge White adheres to the appeals court mandate and issues some kind of directed verdict in favor of Touchstone on the wrongful termination claim.

Touchstone hasn't completely won, however. The appeals court suggests Sheridan can reconfigure her case as a labor code violation under the OSHA law (Section 6310), which could lead to significant damages. Other appeals are possible. But a lawsuit that began as a $20 million bombshell when originally filed has now been brought to the brink of dismissal. Sheridan's legal team led by Mark Baute will need to work some magic to bring it back.

"It is further ordered that the retrial currently set for Sept. 10 is hereby stayed pending further order of the court," the ruling states.

UPDATE: Sheridan lawyer Baute tells THR that despite the appeals court's indefinite stay, he is planning to fight to keep the retrial on track. Baute's full statement:

"The order reflects the court of appeals' desire to have the September 10 trial focus on the Labor Code Section 6310 claim. The reference to amendment in the order is designed to ensure that happens and the September 10 trial date remains intact. This will all become clearer as the briefs are filed later this summer. It does not change the trial or the trial date, and the temporary stay is designed to clarify and resolve those issues before the September trial starts. It would be foolish for the media to believe that an order which expressly states that the Labor Code 6310 claim should be added means anything more than that, especially at this point. We will file our briefs and move forward accordingly."